Police Search I.M.F. Chief’s Home in French Financial Investigation

PARIS — The French police on Wednesday searched the Paris apartment of Christine Lagarde, the managing director of the International Monetary Fund, in connection with an investigation into her handling of a financial scandal when she was the French finance minister.

The investigation concerns Ms. Lagarde’s decision in 2007 to refer to an arbitration panel a dispute between Bernard Tapie, a French billionaire and supporter of former President Nicolas Sarkozy, and the state-owned bank Crédit Lyonnais. The panel ultimately brokered a settlement that awarded Mr. Tapie about $580 million, including interest.

A panel of investigating magistrates is looking into whether she was complicit in the embezzlement of public money in what critics say was an overly generous award to a presidential friend.

Photo

Christine Lagarde, the managing director of the International Monetary Fund.Credit
Lisi Niesner/Reuters

Ms. Lagarde has repeatedly denied any wrongdoing and has expressed her willingness to cooperate with any investigation.

Gerry Rice, the director of the External Department of the monetary fund in Washington, declined to comment on the case on Wednesday, but he said the fund’s board had discussed the possibility of French legal proceedings against Ms. Lagarde before its decision to appoint her as managing director in 2011. The board at the time “expressed its confidence that Madame Lagarde would be able to effectively carry out her duties,” Mr. Rice said in a statement.

In a statement, Ms. Lagarde’s lawyer, Yves Repiquet, said she hoped that the results of the police search would enable the truth to be established and would “ultimately lead to the termination of all investigations.”

Mr. Tapie, a former Socialist politician who switched allegiance in 2007 to support Mr. Sarkozy’s center-right Union for a Popular Movement party, is a former owner of the Olympique Marseille soccer team who borrowed 1.6 billion French francs from Crédit Lyonnais to buy the distressed Adidas sports empire in 1989.

But unable to keep up with the interest payments, Mr. Tapie converted his debt to the bank into shares of Adidas, which Crédit Lyonnais later sold in 1993 for more than the value of the loan. Mr. Tapie accused the bank of cheating him.

When he became president in 2007, Mr. Sarkozy suggested that the Finance Ministry — which was led by Ms. Lagarde and had been overseeing the dispute — move the case to arbitration.

In a French television interview in January, Ms. Lagarde said that referring the dispute to arbitrators was “the best solution at the time.”

Correction: March 20, 2013

An earlier version of this article incorrectly identified the amount of money Bernard Tapie borrowed to buy Adidas in 1989. It was 1.6 billion French francs, not 1.6 billion euros.

A version of this article appears in print on March 21, 2013, on page A5 of the New York edition with the headline: Police Search I.M.F. Chief’s Home In French Financial Investigation. Order Reprints|Today's Paper|Subscribe